<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1998 Commission File No. 0-16701
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
MICHIGAN 38-2702802
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
280 DAINES STREET, BIRMINGHAM, MICHIGAN 48009
(Address of principal executive offices) (Zip Code)
(248) 645-9261
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
<PAGE> 2
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
INDEX
Page
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS 3
Balance Sheets
March 31, 1998 (Unaudited) and
December 31, 1997 3
Statements of Income
Three months ended March 31, 1998
and 1997 (Unaudited) 4
Statements of Cash Flows
Three months ended March 31, 1998
and 1997 (Unaudited) 5
Notes to Financial Statements
March 31, 1998 (Unaudited) 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 7
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9
-2-
<PAGE> 3
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Properties:
Land $11,644,103 $11,644,103
Buildings And Improvements 49,177,038 49,099,290
Furniture And Fixtures 388,515 369,274
Manufactured Homes 2,213,009 2,082,250
----------- -----------
$63,422,665 $63,194,917
Less Accumulated Depreciation 17,505,071 17,057,071
----------- -----------
$45,917,594 $46,137,846
Cash And Cash Equivalents 1,175,073 1,630,552
Marketable Securities 875,859 875,859
Mortgage-backed Securities 1,502,250 1,502,250
Unamortized financing costs 879,000 891,000
Investment 998,995 998,995
Other Assets 592,000 615,736
----------- -----------
Total Assets $51,940,771 $52,652,238
LIABILITIES AND PARTNERS' EQUITY
Accounts Payable $138,842 $126,063
Other Liabilities 860,803 1,220,472
Note Payable 30,045,000 30,045,000
----------- -----------
Total Liabilities $31,044,645 $31,391,535
Partners' Equity:
General Partner 232,158 230,188
Unit Holders 20,663,968 21,030,515
----------- -----------
Total Partners' Equity $20,896,126 $21,260,703
Total Liabilities And
Partners' Equity $51,940,771 $52,652,238
</TABLE>
See Notes To Financial Statements
-3-
<PAGE> 4
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1997
-------------- --------------
<S> <C> <C>
Income:
Rental Income $2,851,408 $2,746,882
Other 187,053 188,626
---------- ----------
Total Income $3,038,461 $2,935,508
Operating Expenses:
Administrative Expenses
(Including $150,346 And $144,617
In Property Management Fees Paid To
An Affliate For The Three Month Period
Ended March 31, 1998 And 1997, Respectively) 825,691 768,140
Property Taxes 235,263 224,025
Utilities 238,136 256,735
Property Operations 408,014 317,387
Depreciation And Amortization 460,000 457,083
Interest 674,358 656,340
---------- ----------
Total Operating Expenses $2,841,462 $2,679,710
========== ==========
Net Income $ 196,999 $ 255,798
Income Per Unit: $ 0.06 $ 0.08
Distribution Per Unit $ 0.17 $ 0.15
Weighted Average Number Of Units Of Beneficial
Assignment Of Limited Partnership Interest
Outstanding During The Periods Ending
March 31, 1998 And 1997 3,303,387 3,303,387
</TABLE>
See Notes To Financial Statements
-4-
<PAGE> 5
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1997
-------------- --------------
<S> <C> <C>
Cash Flows From Operations:
Net Income $ 196,999 $ 255,798
Adjustments To Reconcile Net Income To Net Cash
Provided By Operating Activities:
Depreciation 448,000 440,000
Amortization 12,000 17,083
(Increase) Decrease In Other Assets 23,736 (71,492)
Increase (Decrease) In Accounts Payables 12,779 (33,441)
Increase (Decrease) In Other Liabilities (359,669) (345,251)
----------- -----------
Total Adjustments 136,846 6,899
Net Cash Provided By
Operating Activities 333,845 262,697
Cash Flows From Investing Activities:
Purchase of Marketable Securities 0 0
Capital Expenditures (227,748) 45,158
Sale of Fixed Assets 0 0
----------- -----------
Net Cash Provided By (Used In)
Investing Activities (227,748) 45,158
Cash Flows From Financing Activities:
Distributions To Partners (561,576) (495,508)
Net Cash Provided By (Used In)
Financing Activities (561,576) (495,508)
Increase (Decrease) In Cash (455,479) (187,653)
Cash, Beginning 1,630,552 1,144,427
Cash, Ending $ 1,175,073 $ 956,774
----------- -----------
</TABLE>
See Notes To Financial Statements
-5-
<PAGE> 6
UNIPROP MANUFACTURED HOUSING COMMUNITIES INCOME FUND II,
A MICHIGAN LIMITED PARTNERSHIP
NOTES TO FINANCIAL STATEMENTS
March 31, 1998 (Unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Presentation:
The balance sheet as of March 31, 1998, the related statements of income and
statements of cash flow for the periods ended March 31, 1998 and 1997 have been
prepared by management, pursuant to the rules and regulations of the Securities
and Exchange Commission, without audit by independent public accountants. In the
opinion of management, all adjustments (consisting of only normal recurring
accruals) necessary for a fair presentation of such financial statements have
been included.
The financial statements and notes are presented as permitted by the rules and
regulations of the Securities and Exchange Commission for Form 10-Q and do not
contain certain information included in the Company's annual financial
statements and notes, which should be consulted.
2. PAYMENTS TO AFFILIATES
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, 1998 MARCH 31, 1997
-------------- --------------
<S> <C> <C>
Property management fee
to Uniprop, Inc. $150,346 $144,617
</TABLE>
-6-
<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Capital Resources
The Partnership's capital resources consist primarily of its nine manufactured
home communities. As part of the mortgage financing the Partnership completed in
1993, the Partnership was required to purchase $1,502,250 in mortgage-backed
securities, known as the "Class D Certificates". These mortgage-backed
securities equal approximately 5.0% of the seven mortgage notes payable and pay
interest computed at a monthly fixed rate of 7.5% per annum. The interest
income, as well as the future value of the Class D Certificates could be
adversely affected by a foreclosure or a significant decline in operating
results involving any of the 28 properties participating in the financing
transaction, which include mortgages on 21 properties not owned by the
Partnership.
Liquidity
As a result of the 1993 mortgage financing, seven of the Partnership's nine
properties are mortgaged. At the time of the mortgage financing, the aggregate
principal amounts due under the seven mortgage notes was $30,045,000 and the
aggregate fair market value of the Partnership's mortgage properties was
$56,400,000. The Partnership expects to meet its short-term liquidity needs
generally through its working capital provided by operating activities.
Partnership liquidity is based, in part, upon its investment strategy. Upon
acquisition, the partnership anticipated owning the properties for seven to ten
years. All of the properties have been owned by the Partnership at least ten
years. The General Partner may elect to have the Partnership own the properties
for longer, if, in the opinion of the General Partner, it is in the best
interest of the Partnership to do so.
The cash flow generated by the Partnership's operations during the quarter
ending March 31, 1998 amounted to $656,999. The General Partner has decided to
distribute $561,576, or 4.0% on an annualized basis, to the Unit Holders. The
difference between income generated by operations and cash distributed, or
$95,423, has been added to the Partnership's cash reserves.
The General Partner will continue to monitor on-going cash flow generated by the
Partnership's nine properties during the coming quarters. If cash flow generated
is lower or higher than the amount needed to maintain the current distribution
level, the General Partner may elect to reduce or increase the level of future
distributions paid to Unit Holders.
-7-
<PAGE> 8
Results of Operations
Overall, as illustrated in the following table, the Partnership's nine
properties reported combined occupancy of 92.6% (3085/3,330 sites), versus 91.9%
(3,059/3,330) for March 1997. The average monthly homesite rent as of March 31,
1998 was approximately $336, versus $331, an increase of 1.5% from March 1997.
The less than historical increase in average monthly homesite rent from 1997 to
1998 is due to rent reductions at various communities related to the
implementation of the new individual resident water/sewer billing system.
<TABLE>
<CAPTION>
TOTAL OCCUPIED OCCUPANCY AVERAGE
CAPACITY SITES RATE RENT
<S> <C> <C> <C> <C>
Ardmor Village 339 333 98.2% $309
Camelot Manor 335 319 95.2 309
Country Roads 312 284 91.0 226
Dutch Hills 278 260 93.5 313
El Adobe 371 364 98.1 374
Paradise Village 611 484 79.2 282
Stonegate Manor 308 299 97.1 317
Sunshine Village 356 323 90.7 417
West Valley 420 419 99.8 429
----- ----- ---- ----
TOTAL ON 3/31/98: 3,330 3,085 92.6% $336
TOTAL ON 3/31/97: 3,330 3,059 91.9% $331
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
GROSS REVENUES NET OPERATING
INCOME
3/31/98 3/31/97 3/31/98 3/31/97
<S> <C> <C> <C> <C>
Ardmor Village $ 311,341 $ 315,688 $ 150,708 $ 175,795
Camelot Manor 273,454 276,495 144,334 151,058
Country Roads 201,684 181,373 17,880 10,007
Dutch Hills 235,528 225,736 118,041 108,648
El Adobe 430,739 404,206 283,101 259,624
Paradise Village 347,810 351,885 51,377 72,525
Stonegate Manor 273,242 259,119 123,340 135,113
Sunshine Village 382,300 369,447 231,480 216,970
West Valley 580,453 548,726 394,097 373,395
----------- ----------- ----------- -----------
3,036,551 2,932,675 1,514,358 1,503,135
Partnership Management: 1,910 2,833 (87,326) (61,039)
Other Non Recurring expenses: -- -- (95,675) (72,875)
Debt Service (674,358) (656,340)
Depreciation and Amortization ----- ---- (460,000) (457,083)
----------- ----------- ----------- -----------
$ 3,038,461 $ 2,935,508 $ 196,999 $ 255,798
=========== =========== =========== ===========
</TABLE>
-8-
<PAGE> 9
COMPARISON OF QUARTER ENDED MARCH 31, 1998 TO QUARTER ENDED MARCH 31, 1997
Gross revenues increased $102,953, or 3.5%, to $3,038461 in 1998, as compared to
$2,935,508 in 1997. The increase was the result of the increase in average
monthly rents and an increase in overall occupancy. (See table on previous
page.)
Operating expenses increased $161,752, or 6.0%, to $2,841,462 in 1998, as
compared to $2,679,710 in 1997. The increase was the result of an increase in
administrative expenses of $57,551, or 7.5%, to $825,691 in 1998, as compared to
$768,140 in 1997. This increase is the result of higher legal and professional
fees. Additionally, ex[emses relating to property operations increased $90,627,
or 28.6%, to $408,014 in 1998, as compared to $317,387 in 1997. This increase is
the result of a new water/sewer metering system installed at three of the
Partnership=s properties and higher than normal legal expenses associated with
evictions.
As a result of the foregoing factors, net income decreased to $196,999 as of
March 31, 1998 from $255,798 as of March 31, 1997.
MANAGEMENT EXPENSES
Net Partnership management expenses for the quarter amounted to $87,326.
Expenses of $89,236 (data processing, accounting and legal expenses, appraisals
and wages to employees of the Partnership) were offset by gross income of
$1,910, generated by interest on the Partnership's cash reserves and transfer
fees. The equivalent figures for the first quarter of 1997 were $61,039, $63,872
and $2,833, respectively. Please note that the income of $1,910 reported here on
cash reserves, does not include income from reserves held in securities.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Number Description
-------------- -----------
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during
the three months ended March 31, 1998.
-9-
<PAGE> 10
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Uniprop Manufactured Housing Communities
Income Fund II, a Michigan Limited Partnership
BY: Genesis Associates Limited Partnership,
General Partner
BY: Uniprop, Inc.,
its Managing General Partner
By: /s/ Paul M. Zlotoff
------------------------
Paul M. Zlotoff, President
By: /s/ Gloria A. Koster
------------------------
Gloria A. Koster,
Principal Financial Officer
Dated: May 15, 1998
-10-
<PAGE> 11
EXHIBIT INDEX
-------------
Exhibit Number Description Page
- -------------- ----------- ----
27 Financial Data Schedule
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,175,073
<SECURITIES> 875,859
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,642,932
<PP&E> 63,422,665
<DEPRECIATION> 17,505,071
<TOTAL-ASSETS> 51,940,771
<CURRENT-LIABILITIES> 999,645
<BONDS> 30,045,000
0
0
<COMMON> 0
<OTHER-SE> 20,896,126
<TOTAL-LIABILITY-AND-EQUITY> 51,940,771
<SALES> 0
<TOTAL-REVENUES> 3,038,461
<CGS> 0
<TOTAL-COSTS> 1,707,104
<OTHER-EXPENSES> 448,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 686,358
<INCOME-PRETAX> 196,999
<INCOME-TAX> 0
<INCOME-CONTINUING> 196,999
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 196,999
<EPS-PRIMARY> .06<F1>
<EPS-DILUTED> 0
<FN>
<F1>503(b)(20)-In this RELP the earnings per share indicates income per LP unit.
</FN>
</TABLE>
